$120 million severance package got to tighten the belt. he's only made like 700 million previously we'll tell you what the investigation revealed about the company's culture. it is tuesday, december 18th, 2018, and "squawk box" begins right now. mpl live from new york where business never sleeps, this is "squawk box. >> good morning, everybody, welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick, along with joe. we had an inauspicious day, one showed us having the worst december since the great depression however, they did pair the losses at the close, and that was no longer the case we are merely talking about the worst start to december since

1980 >> beautiful. >> you're looking at the dow futures up 130 points, we were down yesterday by over 500 points, and again that was off the lows of the session. at the weakest points, the s&p was down to 2,530. as much as 2 1/2% decline, and it surpassed the february low we had seen of 25.32. we're going to be watching this quickly. today the s&p is indicated up by about 13 points, nasdaq indicated up by 40 points. anybody who thought we were through the worst of it, was in for a bit of a shock yesterday we've got the federal reserve with its announcement, the federal open market committee making its announcement, there's a lot riding on that. >> the list of stocks of big known stocks. >> that are in bear market territory. >> made me totally reevaluate what do we call a bear market. >> how many of the s&p 500 >> not necessarily those, but just the big names, but i mean,

admittedly, stocks like netflix, a lot of the ones that had been the biggest gainers, but not all of them. 3m, you know, ibm. here, i'll show you. i mean, big 35, 40 >> facebook, citigroup ibm, apple some of these names you anticipate amazon >> and then do you use a russell, the nasdaq, the s&p, the dow? >> all of these stocks down pretty substantially for the course of the year, i think down 12 1/2 and down 13 1/2% for the dow and s&p 500 from their heights. >> so it's semantics whether you really say do you need the s&p down 20% to officially label something a downward. >> you have to have some guidelines for it, so yeah. >> it's not a bear market yet. >> it is a bear market. >> you think it is a bear market that makes me feel better. >> gundlach thinks we're in a

bear market. >> he said stick to bonds, i think. then he goes crazy on twitter. i have no comment. >> we have a bear market that could turn around quickly. >> if it turns around it's not a bear market. because we haven't hit the levels, it does feel scary, though, nobody is looking this as a garden variety. >> i think all of this could actually, we'll see what happens tomorrow tomorrow is the big day. >> because of the fed. >> because of the fed. we're going to talk more about that in a moment let's look at what happened overnight in asia. you'll see the nikkei also closed down. it was down by about 1.8% and stocks in shanghai down by 8/10 of a percent and if you take a look at what's happening in europe with early trading things are looking mixed there the ftse is down by 4/10 of a percent. stocks are up in italy, down in spain.

finally, take a look at treasury yields, too. treasury yields right now for the ten-year, 2.82%. that yield has come under more pressure adds we continue to kind of guess what the fed is going to do. trying to see what's happening with the economy also look at oil prices, they were down sharply on a report of higher u.s. inventories, higher than expects inventories and faster production at u.s. shale basins wti down by 2.75% all the way to 48.51. >> we have some other corporate news for you the big one, cbs officially announcing that former ceoless moonves not entitled to that $120 million severance package he was ousted from the media giant in september following allegations of several women of sexual misconduct, harassment and threats of retaliation after a five-month outside investigation, the board saying it has grounds to terminate moonves for violating company policy and breach of contract. the investigation found harassment is not pervasive at

cbs. at least that's what they're saying but the board says it is taking steps to improve working environments for all employees we're going to talk to a "new york times" reporter, ed lee who wrote the story. we'll talk about whetherless moonves may ultimate -- mr. less moonves may ultimately try to sue cbs for that money >> not currently an issue but. >> what's not currently an issue? >> harassment's not currently an issue at cbs i mean, there's some well documented history on 60 minutes or charlie rose. >> one after another after another. >> and now they're saying currently. >> good for them >> they say they have cleaned their shop >> cleaned house we'll see. johnson & johnson ceo alex gorsky speaking out on "mad medicine" after a roit -- "mad

money" saying they knew their baby powder contained asbestos. >> what's important to remember jim, is these things go back to the 1960s, 70s, 80s, even the reuters author herself stated over the past 15 years, that there ever been no issues related to asbestos and talc or baby powder being used we step back and take a broader look at the more recently cases over last 12, 18, 24 months, there have been about 40 in total, and 35 of those have gone our way, through decision, appeal, a dismissal, and the five outstanding, those are also under appeal so look, we are, you know, we're confident in going forward, and we think that frankly the science stands behind us, and you know, we're determined to make sure that we continue to protect the safety of our products. >> gorsky said he's confident in the safety of the company's products

j and j announced a $5 billion share buy back we're going to talk more about the accusations with our guy, the guy that we talked to yesterday, our viox man. he hasn't aged a day, mark lanier, the attorney, he won a court case representing 22 women who claim that baby powder caused them to develop ovarian cancer he's a pretty well spoken. i just remember he's persuasive. >> the question is do you think the stocks will move at all today. i have to say, i did not find it that persuasive. not, by the way, persuasive that he's responsible for it. just that it's possible. >> he's in a tough spot. he has the legacy of the way j and j handled tylenol, which is in business school books on how to handle a crisis he's like i got to get out in front of this, be very firm and forcef forceful here's the thing. >> i don't know if the facts are on his side. he seems to be more interested

in the stock than the true public image of this whole thing. >> public image, you mean? >> there's a larger cultural question about how people are going to feel about the company. he seems to be more interested in how the stock market is reacting to his stock as opposed to the actual facts of what's going on he may be right about the last 15 years but if there's a possibility of something before that, fess up to it and say you know what, i wasn't in charge at that time. >> and reputationally, you don't want, like a company can't be sued for making vaccines if it's a tenuous link between vaccines and whatever it is they say it's causing. and remember the discussion we had yesterday, you called it the blue tooth worry but i mean, about cell phones and you were saying you would see some type of tangible number of cases if it was even a really small percentage, and the same kind of goes for this, with the number

of people that have used baby powder for years and years, and don't see a much higher incident you would affect, it would be a much higher number of people. >> what he didn't do is answer the question that was raised by these reports in the "new york times" about whether the company had concerns about asbestos. and then tried to bury that and bury research that was done independently. that was the question that wasn't answered. >> it's also possible there could have been trace elements of asbestos more than fifteen years ago that didn't cause cancer or didn't do anything but it was there and the question is how do you acknowledge that >> and the converse of that, too, is that there are questions as to whether talc itself is a carcinogen some studies in mice, which you can never say definitively that it translates to humans but some have shown, maybe it seems to cause tumors others show it doesn't you always say asbestos.

>> i don't know. i looked it up yesterday. >> is it both? >> you can't get a thing in print that tells you how to pronounce it doesn't anyone still have a look up pronunciation where they give me my syllables and, you know, the accents. >> but on a separate note, i do know how to pronounce the word buyback. are you surprised at the buyback yesterday which might have been a good economic decision long-term in that the stock is where it is? but it didn't really move the stock. you have to think about how much selling there must have been for that buy back to not have moved anything. >> if they have conviction, there's nothing there, then maybe you're just saying we're going to put our chips down and support it >> you're not going to know if this was a good decision for some time to go. >> ml, ge, you know, i'm going

to buy stock myself. you know how much he bought at 30. >> i understand but it's a $350 billion company it's like 5 billion is just sort of a token >> the baby powder sales itself are a minor part of the company. >> but $40 billion. >> corn starch solves it all, with aloe and something else, corn starch, go with the corn starch i haven't taken the chance in 20 years, honestly. >> you have been thinking about this for a long long time. >> 20 years. >> i have been thinking about it for over a decade. i think it was ralph larson or even his predecessor was on when haines and i asked him way back then, they looked at me like i was out of my mind about whether, and i wasn't talking abouts abouts a bes -- asbestos, i was

talking about talc itself: i won't use gold bond or any of that stuff when you're in a country club and it's hot. >> so that's one that you thought was obvious 20 years ago, and i said what about the blue tooth cancer. >> it's always been the same issue with ne. >> -- with me. >> and the numbers are low >> every once in a while i hear i used it on the left side, i have always talked like this, and i got a big glioma on the left side of my head you would think with the amount of phone usage, you would see higher incidents >> we're going to speak with mark lanier a little bit later today about his case in particular and what he thinks happens. in terps of tms of the lawsuits let's talk about the fixed income and equity markets ahead of the feds meeting on rates today.

joining us is ryan dietrich, senior market strategist at lpl market research. and gene tanuzo, and ryan, let's start with you just in terms of what we saw with the markets yesterday, it's a little unsettling your take away from this, any good news or all real reason for concern? >> well, first off, becky, thanks for having me back. definitely it's concerning you talked about the month of december obviously like we know, this is the worst december we have seen in a long time for the year, december is the worst month of the year, going back to 1957 when the s&p started. december has never been the worst month of the year. we think there's a chance that santa claus can come the next two weeks. h all in all, near term, there are the concerns, the fed, is there going to be a recession in 2019. that's the big question. we just released our 2019

outlook yesterday. we called it fundamental, talking about what drives long-term gains. we're looking at above average earnings next year, double digit earnings and positive earnings in europe. yes, this is concerning. yes there's a lot of volatility. a year ago everyone was loving the market up 15 months in a row. things are low, we think with good news, maybe starting tomorrow with the fed, 12 months from now, we could have decent equity gains buying when things are scary right now. >> what's the good news you would be expecting from the fed? >> they have a small runway. we think there will be a rate hike we think they're going to say, we're taking our foot off the pedal, and the economy is strong it is true inflation is not present yet one more hike, take the foot off the pedal. potentially some other positives, you know, look at the trade war. we have been talking about it since march. the pressure is starting to hit china. we think in the first quarter,

the fed can get out of the way the first half of next year, and the positive fundamentals that are still there can finally take off. those are the positives we're look f looking for in 2019. >> the fed saying it's not going to raise rates in the first half of the year. even if they are dovish in this, they are not going to give us a timetable. they are going to say their date is specific. >> they want to be data dependent. that is a framework that powell has been moving toward since jackson hole i think they will convey some sense of caution tomorrow. it might not come in the statement. it might come more likely in the press conference they have boxed themselves ento a corner a little bit here -- into a corner a little bit here. they have set themselves up for a hike tomorrow. they probably shouldn't do that. if you look at the fed, their reaction function is based on the balance of risks if you look at the balance of risks it is different than a year ago a year ago at this time we were talking about the fiscal impulse from lower taxes now we're looking at a drag as

we lap that over a year over year basis, and looking at the tightening of financial conditions not only in interest rates but equities as you talked about as well as credit spreads. now we have inflation expectations coming down as well over a 5-year period, a percent and a half that's generally an environment the fed may want to wait and see. i don't think they can do that tomorrow i think we will get a rate hike. in 2019. it's likely you only get one or two, so i think that pause is coming i think tomorrow might be a little bit soon to see it in the statement but the press conference is where you might see that in the language from powell. >> ryan, if they are not clear about just how dovish they're going to be, how will the market react? not giving a timetable, if they say, we're data dependent, we're looking for things, and they sound more dovish than they did last time around, would that be a disappointment >> as long as they sound a little more dovish, the expectations in this narcotic in general, like we said, are extremely low with the global

sell off we have seen. if they could give the dovish tint, that could be enough to take hold. we know the s&p 500 broke the october lows if you look at advance decline lines, the s&p 500 decline line is above the october lows. what's that tell us? well, yes, price is lower. there are more stocks that haven't broken down yet. that's a small positive under the surface with this oversold market that the fed can again be a little more dovish. >> you think this is an over sold market. we are looking at the major averages being below where they were when we first got the tax bill passed and that was supposed to be great news for corporations what do you think changes sentiment at this point? >> well, you're right, i mean, clearly the trade war we think is kind of what's really messed things up, i guess we'll see, but you're right, we gained 22% last year, earnings up 20% this year, stock market is relatively flat, down a little bit. this is a nine-year bull market. the s&p has been down for nine

years in a row we expected higher returns, it clearly hasn't happened. one of the big themes is embrace volatility clearly we have seen volatility this year. we don't think it's going anywhere next year the average year 14% peak to trough, this year, 13% is this year just average, it doesn't feel like, at the same time when you hear it, maybe this year is a little bit more average and more volatility is just the way markets tend to go late in the psych and will that's what we think in 2019. >> gene, are you surprised by where we see yields right now, not just the 2/5 inversion but the ten year is below 29 at this point. >> the u.s. already has the highest real interest rates in the developed world. if you look at the degree to which we have seen financial tightening in this cycle, if you look at the rise in real yields, it's greater than the average tightening cycle than we have seen historically, the magnitude of tightening is meaningful and the fed has a communication

problem that the market is infatuated with the dots in the dot plot, the summary of economic projections, you think what the fed has to do is make a pivot that de-emphasizes those dots you don't want to provide that degree of forward guidance a more effective strategy would be to say hi, core pce inflation has been declining we're not going to hike again until it peaks above 2%. by most measures it looks like inflation has been declining since july of this year and quite frankly if you look at core pce inflation over the last ten years, it's been above 2%, 5% of the time, and i think that brings stability to the treasury market and the 275 to 3 area should be an area of stability for treasury yields. >> gentlemen thank you very much ry . less moonves is not going to get $120 million in severance

from cbs the board there found that there were in fact grounds to fire him for cause. "new york times" reporter ed lee joins us next. as we head to break, here's a look at the biggest premarket. we'll try and look at the winners, but mostly the losers yesterday in the dow ♪ there's no place like home ♪

argh! i'm trying... ♪ yippiekiyay.

♪ mom. ♪ welcome back to "squawk box. we have the big fed meeting tomorrow the market off yesterday dow looks like it would open up about 147 points higher right now. nasdaq up 47 points higher, and the s&p 500 up about 15 points higher let's talk right now about cbs because former cbs chief executivele executive less moonves being denied his severance package, he misled the company about allegations of misconduct. i want to bring in the reporter who helped break the story, ed lee, also a cnbc contributor

good morning to you. >> good morning to you guys. >> you wrote the story a couple of weeks ago about what the board or what the lawyers for the board. >> telling investigators what they found, right. >> a surprise to you or not in. >> -- or not >> this is not a surprise. the board was as straightforward as possible. the statement is a relatively short statement but some of the language was lifted from parts of the lawyers' internal report to the board about what they discovered. >> is this the end of the soap opera or the beginning of the soap opera, what comes next? >> $120 million is a lot of money to leave out there is a chance that les moonves seeks arbitration. his separation agreement allows for that possibility, where he could arbitrate, bring it to a third party. >> he has the money to sue them. did i see him referred to as a billionaire? >> yes according to equilar, he's worth

a billion dollars. 120 million, that's still a lot of money either way. but there's a chance. >> how many yachts can you water ski behind, he needs a wealth tax. an an drew sorkin wealth tax nobody needs all that money. you could do a lot of good with that >> there's a larger pr issue with that. >> i would say, even if all of these relationships were c consensual, reading the details it's hard to make that case. it's what you were telling the board at different times that's a much tougher. >> what you were telling them, what you were not telling them fact that he handed over his son's ipad. >> for his. >> that's not a great, not good, no good way around that. >> but we know that went back to 2004, he's been like a happily married man, right >> right >> okay. >> julie chen. >> if you did something with

laura mar in the 80s and don't cop to it, can you go back that far? >> what the investigators, what they found is that he had engaged in, he still calls them consensual acts with cbs employees. >> what's the most recent though, it's still quite a long time ago >> we don't have a date on the most recently but we do have as late as his time at cbs. >> let's talk about what happens next so current ceo, acting ceo. >> he is a candidate to succeed l lev -- les permanently. >> he sent out a note to employees following the board statement where he said, look, we're happy to have this move behind us, but a lot more work to be done we need to fix this culture. if you have issues, you want to report stuff, call me. he put his phone number in the e-mail to all cbs employees as

well as a dozen other executives he's acting in a manner that you should be doing. sherry redstone, a controlling owner, she's going to have a big hand in the decision process they're looking at outside candidates he's got a 50/50 chance, i think. >> what does sherry redstone think about him? >> they have come to terms they had a sit down when he was, just ahead of him being appointed acting chief executive. he was on les's side when there was the lawsuit that he and other board members had filed against her to take over control. they're cool for now >> that gets you back to what happens next is there going to be a viacom put back together? >> this happens through the lens of who's the next ceo, how do you merge are viacom. >> they said they wouldn't do it for two years, but when did that clock start? >> she's preventing from initiating that for a period of two years. the board of cbs or viacom could

come to the conclusion. >> this whole debate about who the next ceo is going to be, isn't the debate about when the two companies are going to merge? >> i think in the next 18 months, there's going to be significant corporate action on the cbs viacom side. they had discussions earlier this year. >> why is there a debate about who's the next ceo the next ceo is bob backish when they're merged. >> they're going to look for a ceo who can best handle this merge? >> i'm not suggesting one or two is better, the plan from what i understood always was that in the sherry redstone view of the world, the companies would merge, bob back ish would run the company. >> i think she certainly trusts minimum to run viacom for now. i don't think that's in doubt but i think who runs the combined entity is a much bigger deal there's a higher fractional

value in terms of just how you present it to wall street, but then also that combined company could be up for a deal subsequent to that, right, where that either buys other things or it becomes acquired. that's a much more, there's a lot of corporate action that needs to take place. >> in other words, keep your head down and get performance of your company. >> do you have any suggestions for the usc, for the julie chen,lechen les moonves center >> i think they took his name off of that. >> they suspended while this was going on they're going to need a new joe kernan ed lee. it's for communications, journalism and communication. >> you're an established expert. we should have a joint parameter. >> they should call us up. we'll put our names on it. >> no, really. i have been there, and it's beautiful. it's one of the best in the country.

those names were, there was no doubt who gave the money to build that thing, and they're taking them down there are construction guys pulling those. i think they already did you can't have that. >> yeah, you can't have that when you do what he did. >> all right ed lee. >> thank you, sir. >> nice to see you. >> congratulations on the scoop. when we come back, uber and lyft are racing to go public, but will the market carnage force them to speed up or hold off. we'll talk to ey's jacqui kelly next. as we head to a break, let's look at yesterday's win skpers losers -- winners and losers. the future of technology investing

lies beyond the tech sector. it's about technology transforming every sector. ♪ at pgim, our bottom-up approach uses a technology lens to identify long-term winners. from energy... to real estate... to retail. finding such opportunities for alpha is the true value of active investing. and around the world, you have a partner in that pursuit. pgim: the global investment management businesses of prudential.

welcome back you're watching "squawk box" live from the market square. let's look at these futures. you can keep your 149 points after yesterday and last week. you think i'm supposed to like this 147 points. just going to sell it off. no, who knows what's going to happen throughout the day, but this doesn't help, chinese president xi jinping addressing his nation overnight he focussed on china, in his words staying the course, adding that no one is in a position to dictate to the chinese people what should or should not be done the speech comes just a few

weeks after the u.s. and china called that 90-day truce, which is about 70 days now the clock is it canning. we know how fast time is moving. >> well, the whole idea of what he's saying sounds ominous if you think about what president trump says routinely in his speeches and in his tweets, it's no different. >> maybe it's the same thing. >> it's not different than what he's saying. let's talk about stocks to watch, oracle's second quarter profit rose 5% revenue was flat but beat forecasts. the company sees a strong fourth quarter because of continued growth in the cloud business also shares of boeing are high this morning too boeing is hiking the quarterly dividend by 20%, and increasing the share buyback from 18 to $20 billion. boeing right now indicated up by 2.1% there is something that is helping the dow right now. t-mobile and sprint have won approval from u.s. national security officials for their

merger that deal needs the green light from the fcc and the justice department t-mobile expects to get those approvals in the first half of next year. >> this is a big deal. >> to get this approval? >> it is because there was lots of anxiety around the relationship that sprint had with soft bank, the controlling shareholder, and the softbank's connection to huawei so huawei, most of the equipment that softbank uses is huawei equipment so to the extent people have been worried about the security concerns about huawei inside softbank, would that transfer over in some strange way to sprint t-mobile and that was the issue this is a break for them. >> those security concerns are a big enough deal not only here in the united states but other places british telecom went back a week or so ago and was ripping out huawei equipment. >> and huawei equipment is not used in the united states but the issue was the controlling shareholder, anyway, that was what the issue is.

separately, 2019 looks like it may be a banner year for brand name ipos. uber and lyft filing confidential papers. here to bring more, jackie kelley is here, ey america's ipo leader we have had a rough month, let's just say, of volatility. volatility is not typically the friend of the ipo market at all. we have had these names come out and say we want to go public in 2019, but the question i have is actually whether they will go public in 2019 given what we're seeing in the marketplace. >> we have a very significant lineup of companies behind the scenes just like some of the confidential filers you mentioned that are getting ready to line up for 2019, especially the first half of the year in fact, we have had a number of companies accelerate their ipos. >> right, and is that a sense that somehow the window is closing? and if the sense really is that the window is closing, that is not a good sign more broadly for the markets. >> i think the market turbulence

accelerated that and then the announcement of some of these ipos, there is a feeling maybe the window is not going to last that long. >> do you want to be in an ipo where people are trying to rush before the window shuts on you, and whether that means the stock is going to go up. >> what if the window shuts? >> that's the concern is they might get stuck and not be able to get that exit out for a while, and a number of investors have been in for years on these deals. >> right but it's like you're passing the bag to the other guy you want to get out for the private investor wants to get out. i understand that. the question is whether the public investor wants to be holding the bag. >> management is going to be in for a while. >> you can price it where you probably want. you can get it out >> you're not going to get the demand you wanted otherwise. >> when these windows are stuck, and the imperfect market, you may not sell as much equity, and you wait for the second and third offering after that. >> right if you bought in at the ipo price of this year's vintage of

ipos today, would you be up or down >> up 10%. >> up 10%. >> right >> wow, that's not what i would have expected the answer to be. >> yeah. and how does that compare to last year or the year before >> typically ipos outperform the market they're going to be ahead of the average s&p index or others, which is great so i think for most companies, you know, people or individuals looking to invest in ipos, it is a great return. >> i was going to say, are we all thinking about technology oriented ipos or other industries >> health care has been dominating from a deal number perspective. the deal sizes are smaller and we're going to continue to see them tech, it's the two of them, a race to the end. >> one more thought just in terms of trying to get there before the window closes, i have been thinking again about how these companies have been able to stay independent for so long, without going public because they've had so much money that's been sloshing around in the private markets.

>> right >> if you're talking about the central banks trying to reign in qe, trying to dial down the balance sheets, maybe some of that liquidity dries up. do you think that's the case or not? >> there's an interesting correlation, almost an inverse correlation, so interest rates, you know, rise and you would think that, you know, that's going to sort of dry everything up what that does is creates less liquidity and opportunity in the private markets. it should boost what's happening in the public markets because that value of that. >> do you think the private market is going to continue to exist as it has for the last, let's say, five, eight, nine years. >> it's a good question. they are going to try to liquidate. we're going to see that over the next 6 to 12 months as they take money out of big deals to hopefully redeploy into other up and coming ipos. >> jackie kelley, thank you for coming by, appreciate it ey, america's i po leader. >> thank you for the ginger bread house you brought. we're going to get it on air later.

jackie brought us the beautiful "squawk box" ginger bread house. >> those are things we need to think about. we broke one out last night. we have saved them before to the point they're no good. there's nothing worse, we have to wait for christmas. >> saved it from last year. >> save it too long at christmas to actually, you know, you don't want to disturb it you got to wait. and we waited and it's like. >> it looks gorgeous. >> there's a time, there's a window >> we bought a ginger bread kit this year that we thought we could make one but it actually came almost sort of premade, and it was sad you could add the stuff. >> i got one and it looks like a disaster. >> we brought you cookies, joe, because i think last time we had the house on, you ate the house. >> you know what, live in the here and now you don't know about tomorrow. one day. it's not even guaranteed. >> wait until you see this

thing. we will show you. >> is it big is there gummy candies on it >> santa is on there too. >> jackie, thanks again. >> thanks. when we come back, we are digging through statistic from the selloff. first, dow transports under pressure, down in eight of the last nine sessions and flirts with bear market territory, we're going to talk to an analyst about that. and interest rates ahead of the fed decision, the central bank deciding whether to hike rates tomorr a2: p. stn meowt 00.m stay tuned you are watching "squawk box" here on cnbc about buying our new house. well, it's a good thing we don't have to worry about homeowners insurance. geico can help with that. we can get homeowners insurance help from geico? well, sure. and they could save us a bunch too. mmhmm? i'm starting to feel better already. get to know geico and see how much you could save on homeowners and condo insurance.

emmanuel cau the world economic forum out with a new report that finds that gender equality. >> way to sell it. we're headed there in january, folks. yay. >> anyway, gender equality appears to be stalling globally. the report found that women gained in some measures such as income but declined in access to health care and education. and political involvement. women continue to be under-represented in jobs focussed on s.t.e.m. skills of science, technology, engineering

and math, and in particular, women are being left out of the fields of artificial intelligence, representing only 22% of the jobs in the machine learning field >> okay. coming up when we return, dow transports getting crushed the index down more than 11% this year. trading at the lowest leve e september of last bit shippers next.outhe take a looat uequi futures tradg neession highs rinow. dow looks like opening about 171 points, nasdaq up 58 points, s&p 500 looking to open about 18 points higher, as we head to a break, a quick check of what's happening european markets right now. the ftse is off, but the german markets up right now we'll be right back. at&t provides edge to edge intelligence. it can do so much for your business, the list goes on and on. that's the power of &. & when your patient's tests come back...

♪ welcome back to "squawk box" this morning we are one week from christmas and that means shoppers have officially run out of time for standard ground shipping on many retail websites. look at that beautiful -- >> i love it it's so gorgeous stay away from it! don't eat it don't touch it >> it's too nice come on. come on. >> don't do it don't do it! >> please don't.

>> it's so pretty. >> if you're going to do it, take an icicle off the back. >> this was not attached >> all right courtney reagan is patiently waiting for us she's joining us now from a shipping facility in kentucky, no less, where ground shipping is getting a little more complicated. courtney >> reporter: good morning. that's right we've got about a week until kids around the country and the world are going to be waking up their parents wondering if santa arrived. so santa's helpers, listen up. today is going to be pretty much your last day for ground shipping in time for christmas we're here at radial this is one of about 20 fulfi fulfillment centers across the country. they're working with more than 75 brands and retailers to fulfill those e-commerce orders. the company expects more than 315,000 orders will be shipped from its network today 1.7 million between december 16th and 22nd. and more than 7 million for the entire month of december

now, similar web rs ran a scan cnbc to see how far it's faired this year compared to last year. similar web found e-commerce down about 17% on the rue21 website. and dick's sporting goods off. other brands are seeing stronger traffic. kenneth cole, up 49% untuckit up 27%. new york & company up nearly 20%. niemann marcus and ralph lauren website traffic has grown 16% and 12% respectively so far for the season according to similar web. today is also the last time to ship for amazon, kohl's and gap. you have more time at

walmart.com, target.com, and macy's but you're getting awfully close. back to you guys >> courtney reagan, thank you so very much. by the way, there's so many things -- we were just talking about the oprah stuff on amazon. >> it's sold out that has been my frustration if you haven't ordered it yet, you're not getting it. >> is it a shipping problem or the inventory? >> the inventory was out you had to buy earlier this year this was the longest calendar period 33 days from thanksgiving to christmas. so you had to buy early. >> joseph? have you bought early? >> i'm actually going to get involved with some things today, i think. >> stop the presses. >> yeah. >> wow >> but it's in coordination with the people involved. i can't do anything on my own. >> because you're incompetent. >> no. because it's impossible to do the right thing for -- people should get what they want. >> that's what i mean. >> i guess i am. i mean, i'm a competent

person -- >> incompetent in picking the right gifts. >> yes fedex and u.p.s. falling joining us now to break down the slump in the transport sector during the holidays, don broughton. it's worse than the average stock, don which i think there are some specific things here i've always said oil at $49 and the transports are taking it tougher than anything else that doesn't make sense. make sense of it for us. >> well, you know, in a lot of ways it looks a lot like 1998. you know, we have a lot of dilemma about foreign currency only it's brexit instead of the thailand baht. we have the openly discussed possible impeachment of a

sitting president. we have a huge devaluation we have the entire -- all the economic readings, all the volumes out there extraordinarily positive yet the transports have been devalued. you know, we go back and look. you know, joe, you and i are guys with advanced tenure and banter about big terms like advanced data and blockchain to appear younger and smarter than we are but the truth of the matter is right now you can see in realtime data that confirms that there's been a record number of containers come across the pacific from asia to the united states you know, if you look at the freight wave sonar platform, you can see the spot rate for those go literally triple between april and october. so when the -- about midway

through november when you saw those ports report up 17.7%, a record high in volume, it wasn't a big surprise we've seen it happen through the truck volumes, et cetera so i hear what you're saying about out of stocks, becky, but the truth of the matter is there's a record amount of inventory that's been pushed into this system and ready to be moved. >> that's kind of interesting what you're saying there i'm not sure how to rectify what you're saying with whether we're in a good economy or a bad economy. i hope you're not -- you know, i hope it's not indicating that this is a leading indicator of an end of cycle move the point you made -- i hate 1998 because you had all those tech stocks. if you look, there are similarities between faang and what happened in '98 even though

they have valuations >> the real blowoff peak there didn't happen until the beginning of 2000. >> we need to have you back, don. we talked about the stupid ginger bread house too long. but we'll have you back and want to see what happens. you know, i'm going to eat that thing, i think, because now i don't like it. thanks, don broughton. >> come back tomorrow. coming up, the dow posting back-to-back 2% losses first time since october rctting its lowest close since mah. we will talk strategy next the future of technology investing

lies beyond the tech sector. it's about technology transforming every sector. ♪ at pgim, our bottom-up approach uses a technology lens to identify long-term winners. from energy... to real estate... to retail. finding such opportunities for alpha is the true value of active investing. and around the world, you have a partner in that pursuit. pgim: the global investment management businesses of prudential.

the fed in focus markets get ready for a two-day meeting and and expected interest rate hike >> the dow component is the worst in the financial sector. we've got the latest and on the defense. >> we unequivocally believe that our talc, our baby powder does

not contain asbestos >> the second hour of "squawk box" begins right now. live from the beating heart of business, new york, this is "squawk box. >> good morning and welcome back to "squawk box" here on cnbc we're live at the nasdaq market site in times square i'm andrew ross sorkin with becky quick and joe kernen our guest host this morning is walter isaacson who is now advising partner at pirella weinberg and so much more. after a rough day yesterday, it looked like we would be in the green this morning if things open up. dow would open up 164 points higher nasdaq 54 points higher. s&p 500 up 16. among the stories front and

center this morning. johnson & johnson are fighting back against a reuters report that says the company knew many years that its baby powder contained asbestos >> we unequivocally believe that our talc, our baby powder does not contain asbestos and that's demonstrated in thousands of studies studies not only conducted by johnson & johnson, but conducted by respected authorities we work with regulators who are overlooking at methodology throughout this process, we not only use the best testing methodologies available, but we continue to improve them through the years. >> the company has announced a $5 billion share buyback after j&j shares we're going to put -- hearing

him yesterday was really something to watch with jim cramer just hearing his explanation for this, what he would say and wouldn't say >> and the interesting thing is the science should be positive and it says there's no asbestos. occasionally with anything, you're going to find trace of anything and yet we've become a little bit less willing to just accept, okay, they're experts in science these days >> the science isn't definitive on talc itself >> right but on that they don't have asbestos in the baby powder. >> we're talking about talc itself and whether it causes tumor formation in mice. >> but didn't they get sued mainly on asbestos >> that's the case that's up now. >> i don't think if you -- didn't throw in the word asbestos, you wouldn't have gotten that. >> hearing from alex gorsky yesterday, this is an issue for

the last 15 years. i think the big questions go back to the 70s and the '80s where there were these questions. >> there were even e-mails inside the company yeah i mean, look i just flew up from louisiana. everywhere you go in louisiana, people can say here's an environmental hazard we just have to have a more secure way of assessing and doing the risks and rewards instead of these huge jury trials that sort of hit one thing or hit another whether it's oil in the gulf or talc in our powder >> we're going to continue this discussion later on this morning. we have mark linear who won one of those cases joining us now, cnbc commentator mike santoli and peter boockvar at bleakley

advisory group and a cnbc contributor. we sign him more as things get bleaker and bleaker. we'll start -- you didn't actually put any specific santoli-esque -- >> i'm just going to counterpunch >> you may need with that boockvar i've kidded you in the past about being bearish. but in the past couple of months a lot has come to pass do you think we're searching for a bottom here? or are we on an elevator halfway down from its destination? >> i think in the very short term and we can define that in the next couple weeks. i think when we sold off, those were the areas of safety that people were hiding out in. once they got around to that, it was a lot of forced selling. whether it was margin calls,

redemptions, people raising cash that kind of fore selling means you get to a short-term bottom >> in the past, rates were staying low for too long and a lot of people argue that and both people -- both sides are sort of claiming victory now. people said they should have been raised two years ago. saying that was the window of opportunity. and that staying here this long is making the exit almost impossible >> right >> so even the journal today is saying, look, pal. the politics will work themselves out no one is going to second guess you if you decide not to do it tomorrow but say you're knuckling under trump. just do what's right and right now is the time to pause basically what the journal's contention is right now. do you agree with that >> if you look at the data, it's

easy to say pause. because there's press conferences every meeting next year, if they don't hike tomorrow, they can do it in january if they felt that things got better but on the other hand, real rates are only at zero we had a core cpi 2.2% and people can say that's backward so do we want to have the fed get stuck at 2% and then we get into a bank of japan situation where they sort of get trapped and just the slightest bit of tightening creates the problem and they get stuck and they kowtow and they don't really take away -- i mean, there was never going to be a free lunch here >> thought we put it to bed. they took a victory lap. bernanke and yellen saved the world. >> look at the mandate they kind of got there, right? >> what if we can't get out? what if we have some horrific event -- >> or what if you bump some

things along the way of getting out? i think you can set aside the politics, set aside the criticism of powell by the president. when you've come into a week when the market had priced in 70% of the fed going, then just not going in that respect no matter what the reason was, it seems like a little bit of the panic move they've not set the stage for. now, look outside of what the stock market has done. outside of the stock market and are you getting an overwhelming sense that the data have turned in favor of, whoa, whoa. we can't handle another quarter percent right now? i don't know if that's true. >> if the fed paused and we got -- we'd get like a 200 point bump in the futures, the next day they'd be down a thousand. you get what you want and it wouldn't help. >> it can't handle another 25 basis points at this level >> the market is not hiking because of data softening, what happens if it continues to soften and they only have the fed funds rate at two?

how are they going to deal with the next downturn? so mike's point -- >> i was going to bring that up earlier. sorry to interrupt i was going to bring that up earlier. it makes no sense to keep raising rates. it's like waiting to give someone medicine you want to build up, let the flu get really bad it doesn't make sense to maybe cause the slowdown so you have some dry powder to cut rates you go up so high that -- you're the arson that's then giving suggestion on how to put out the fire >> you think we should go up just so we have stuff to do for the next downturn? >> fed has been going so slow. they went once in 2015 once in 2016 to go four times, this is considered aggressive. greenspan was going eight times a year now, i know where this ends. the odds of a soft landing are slim since world war ii, they've only pulled it off 20% of the time. and those three times of the 13

was early on in an economic cycle. i mean, we can all hope for a soft landing, but the chances are very slim they can pull this off. again, because there's no free launch to the extent of the easing they had. >> when it comes to the stock market, we shouldn't pretend it's all about the fed and whether it does or -- >> what is it about that you've got oil at $49. that's worrisome >> 8% earnings next year has got to come down >> that's flat with a great year this year. comps are hard but still great earnings other than a little weakness -- is the market really weak. how weak is housing? >> i think it's pretty weak. it's not a source of net growth to the economy right now that's something >> you've got the china slowdown and european consumers but here you don't have data points that suggest that the market should be acting this poorly, do you >> probably not. >> we don't know what it is yet. >> one of the issues is if you overshot so much with the big

growth momentum stocks that really kept you together for eight or nine months this year, what's the 180 degree reverse of overshooting to amazon $2,000 a share? is it $1,600 or $1,400 >> people hate blaming the fed but at this point i'd say we underestimated what slight rises in rates are because of the amount of debt that built up in the glory days >> all right we got the 10-year at 2.80% now. >> not just there. none of those things on absolute levels don't make sense. compared to what they used to be >> i know. the stock market is back to where it was ten months ago. we first got to these levels -- >> that's what kind of catches my attention the statistic i've heard repeated the most kind of gets to me that we are back to levels any gains we saw from the tax

cut going through for corporations are gone. and does that mean that that was a complete overreaction to the tax package? i mean, either you talk to somebody like warren buffett they make the point you're getting a much bigger percentage of the company's earnings. >> the stock market really started to levitate around late august of 2017 which was a few months in advance after a little bit of a sideways period. well in advance of the tax cut being a secure thing so i don't think it's all about unwinding that necessarily we speak of this period of 2015 to 2016. people thought it was controversial. >> but i remember not thinking -- >> but at the low, it was at a level it first got to two years earlier. >> i remember still being surprised. not thinking they had the votes to make it that's not why the market started going up earlier that was a surprise. even october/november people

were saying -- i think it was still less than a 50/50 shot it was going to go through. >> the market's been deciding all along what multiple do you put on a massive bulge in windfall earnings. if the market has to get super cheap, it's not there. >> even if the fed pauses, they're still shrinking. there's been a tightening all year >> sit a windfall or a new reality for corporations you're not going to be giving that much over to the government >> it's the same by the way, look at the retailers. everyone said they're going to compete away the tax cut that's what you're seeing with the retailers. >> these are very partisan times. and many parts of, you know, the people that follow these things closely have watched in absolute horror as the together went up, as unemployment came down, as gdp looked like it was going to hit 3% because of whether you think it's trump's policies or not, but things were going

pretty well. and they were watching in horror and they're coming out of the woodwork now it's like, see see what happens and we're really still -- >> but you got to own it on the way down too >> at this point, if you do the -- market's up quite a bit >> from the election you mean. >> it's down for the year. probably still faster growth for the year we'll see whether it lasts or not. consumer confidence is still good some of it's china and that's self-inflicted. you have to decide whether the long-term something good comes after finally facing down one of our biggest competitors at the very least maybe enemy at the most. >> china might end up being a good thing i think you made a good point which is there's so much emotionalism all over. i do think some of that emotionalism is reflected in the market when it's just reacting to everything every week now

without comparing to the underlying value >> our transport guest was comparing it to '98. he said we've got another sitting president with the "i" word being tossed around on a daily basis. >> you know, sure. you can put the pieces together. 94 is the one you want to root for. >> yeah. we had some great gains there. >> thanks, guys. we've got a lot more come up on "squawk box" this morning dan gallagher on regulations in the pipeline for 2019 and what it means for business. and then later goldman sachs in hot water over that malaysian state investment fund. the stock getting hit hard this year currently one of the worst performing financials. we're going to talk about the case and what it means for investors. you've got to stick around for both of those things ♪ there's no place like home ♪

argh! i'm trying... ♪ yippiekiyay. ♪ mom. ♪ all right.

president trump just tweeting. i hope the people over at the fed will read today's "wall street journal" editorial before they make yet another mistake. also, don't let the market become any more ill-liquid than it already is. stop with the 50 b's feel the market. don't just go by meaningless numbers. good luck. all right. dan gallagher on the s.e.c.'s agenda coming up and then we'll talk about what to expect after this week's fed meeting. i think powell has a tough job to follow bernanke and yellen. "squawk box" will be right back.

welcome back, everybody. s.e.c. chairman jay clayton recently revealed his agenda for 2019 top priorities for the agency include pushing a standard of conduct for brokers and improving the proxy voting process. joining us right now with his regulatory outlook for the new year is dan gallagher. he is chief legal and financial officer at mylan and former s.e.c. commissioner. thanks for being here. >> thanks for having me. >> are there any other big secrets in this agenda >> no, it's amazing. i think for the first time in years, maybe decades, we actually know what the s.e.c. chairman wants to do when, at what pace, and what order. it's a model of clarity.

>> is there any road blocks -- are there any road blks to his items getting passed >> if you look at the twos in his speech, best interest which is the so-called issue, that is a thorny issue that's one that is as old as the ages and they put out a proposal last year. i don't think it was perfectly smooth in getting that proposal out. the proof's in the pudding >> i can't believe we're still having this argument about whether brokers should be required to have their clients' best interest at heart why is that such a difficult thing to get anybody to agree to no, no >> it's amazing. that's why it's aptly named best interest when you call it reg best interest, who can argue against that right? the futury put out, that's a whole different standard that's meant to shift all assets

into the advisory. >> good advice for facebook and google to think about that has that entered their mind even remotely >> i'm learning there's the best interest -- >> got to do the extended release version. >> you know, the s.e.c. seems to be sort of a haven right now of non-partisanship and you had an old colleague i think as a republican. tell me about him. >> the newest republican commissioner of the s.e.c. was mike counsel very diligent, hard working guy. he's going to put his head down. he's going to get the work done. i think you're right about the haven point. >> those in washington have a lot to learn >> they have a lot to learn. i think the way jay clayton has

taken over that agency, it really hasn't been a political hot button and part of that to his predecessor's defense, i think, is it's not as hot a time as it was, you know, ten, eight years ago. >> let me ask you about the hotter time. one of the issues that you often hear about the s.e.c., one of the critiques of the s.e.c. in a trump world, if you will, talking about it being apolitical or not apolitical, it has been more pro-business it has been less aggressive when it comes to enforcement action do you agree with that >> no, i absolutely do not this is something i thought when i was on the commission we were always being criticized by politicians, pundits we're not putting anyone in jail but that was literally one of the criticisms you're not putting people in jail and the truth was the facts will set you free if there weren't criminal acts or civil violations, you shouldn't bring a case to appease the blood lust

>> what was your reaction to the elon musk settlement and the comments by musk afterwards? >> i thought it was a fair and well crafted settlement. i think it was good for both sides. i was very impressed with the commission getting it done so quickly. >> what do you think of elon saying he doesn't respect them, he's not going to listen to these things, even though he may not be in charge officially by title he doesn't need to be. he's the controlling shareholder. >> it's his right to be able to say certain things even if he says in an s.e.c. order he's not going totry to doubt the settlement he's entered into >> is that a toothless settlement then? >> kind of, yeah >> but the separate issue is enforcement of the settlement. he specifically said on '60 minutes" that he does not have his tweets reviewed by counsel in advance my understanding, if you read -- >> that was part of the order. >> -- the order is they're required to be do you believe that the s.e.c.

should take action in that specific case? >> well, look. the s.e.c. should enforce any order. should give it teeth, right? you can't just have somebody sign up to something >> therefore you do what >> i looked. already under current investigation on their accounting practices you've got people there talking to people already. my guess is the truth is there in the middle. with elon musk, it's not as bold and stark as he says >> of his tweets being monitored? >> i find it hard to believe they would contract to have that in his order and then starkly say -- >> he said on television that he doesn't have them reviewed at all. >> why do you have a view that they are being reviewed? >> i just have a view that the team he's put around him would have a really hard time with

them not following the order and in any public company, i think -- >> give him the benefit of the doubt where i don't think everyone believes he deserves the benefit of the doubt he's crazy about certain things. >> i don't know that either. he certainly is a great entrepreneur >> yeah. >> again, i don't know all the facts. one thing i think we've learned throughout that whole matter is there's a little more than meets the eye. >> cryptocurrency. >> yeah. >> that's on the agenda for the s.e.c. in 2019 >> yeah. >> what do you think the right answer is? >> i think the right answer was what jay clayton did come in and clean up a lot of the fraud. i mean, the fraud was just incredible those icos, they were all illegal securities offerings many of them the money just went offshore u.s. investors completely ripped off with no chance of the government helping them or themselves, you know, getting the money back so i think he's done that. he's come in with a big stick and beat it down pretty hard how do we do this the right way? which is what you're supposed to

do in the first instance now they're getting the lesson right. and i think now the challenge for the agency is to say how do we make this legit, right? how do we provide the appropriate regulatory >> is it their job to make it legit if it's not? >> if it was an illegal securities offering and now you have to come in and comply, doesn't matter if it's a token, it's a security now. what do you do with -- once you have that security, you have brokers and agencies and exchanges. all the registration requirements of the s.e.c. are triggered once you have that security that's what they're going to have to deal with. and in those, they said as part of the settlement, you're going to register. now you're going to have the registers securities that used to be unregistered anyone who touches them, triggers a registration category >> that sounds like a mess thank you for coming in today. dan gallagher who is the chief

legal officer at mylan he's also a former s.e.c. commissioner when we come back, we'll tell you what you need to watch around the fed's decision on interest rates we've got the results of the latest cnbc fed survey straight ahead. now as we head to break, look at the u.s. equity futures. dow futures indicated up 170 points s&p up by 17 and the nasdaq by 55 stick around "squawk box" will be right back. [leaf blower] you should be mad at leaf blowers. [beep] you should be mad your neighbor always wants to hang out. and you should be mad your smart fridge is unnecessarily complicated. but you're not mad, because you have e*trade which isn't complicated. their tools make trading quicker and simpler. so you can take on the markets with confidence. don't get mad. get e*trade and start trading today.

but 12% now saying the fed may cut. and that cut would come -- >> what? >> yes a cut is now in the cards. or in the discussion as part -- i know i'm glad you reacted that way, becky. >> but we're going to be raising

rates now and turn around and cut? >> turn around and cut >> that's what happened at the ecb, remember? when they were raising at exactly the wrong time >> that's the thinking right now. at least of some i point not that i think that's the conventional wisdom or that it's going to happen, but it's out there as an issue among at least 12%. maybe that's the crazy 12% maybe not. we'll talk about who those are 60% say the balance sheet is -- reducing the balance sheet at the current pace is the way to go very quickly let's see the market outlook for the fed that's the next one. and that market outlook, you can see it's come down by about 30 basis points for each of the next several years including the long run and then the last thing. will the fed go above neutral? before they were a majority said yes the fed would go above neutral. that has now changed 70% says the fed will not hike above neutral, that is to slow the economy. >> that's neutral. >> okay. there's a broad range of

neutral. between the fed's estimates of neutral between 2.5%, and 3.5% so they're just below the lower end of neutral let me just tell you, though, all this suggests to me, the market fell 500 points yesterday. right? except for the balance sheet reduction, the fed is practically factored out so i'm not really sure that you can any longer finger the fed as the culprit here because i mean i guess there's still fear -- >> what do you mean they're factored out >> look at what the expectation is next year one hike in 2020 maybe one or two next year total. >> i'm not saying they did, but that seems to be the question we keep hearing is it too late >> and i guess that's the president pivoting to this idea. >> is he now going after the balance sheet? like, we stopped the rate hikes. >> there has been that pivot, i

guess, mnuchin's talked about that i will point out that four of the five members of the federal reserve board of governors appointed by president trump so his people will be disappointing. >> and the fed chair as well >> that's what i'm saying. >> vice chair for bank supervision. and michelle bowman, the one who's -- four of the five members with two more to come. >> also worth noting that his own position on what the fed should do has shifted which is what always happens. which is you don't want interest rates. >> this is not what always happens. let's be clear about that. what's going on now of the president daily tweeting, let's pinch ourselves and remember -- i know that's not what you meant. i think it's worth pointing out that this is not what always happens. and i do know that federal reserve officials feel this complicates their life >> there is no twitter. >> there was no twitter back in

the day. but but if a president had wanted to make those comments, they had avenues this is dangerous in my opinion political pivot by the president. because it puts the federal reserve in play as being responsible for the recession or downturn and shifts it away from the president's own policies >> okay. joining us now to continue this conversation is joshua fineman from deutsche bank and kevin giddis is here from raymond james. is the fed factored out? >> markets don't have much more fed in there i mean, if you look at the survey, it's one thing if you look at what markets are pricing, they're pricing in precious little next year. >> is is there any chance we're all surprised next year? >> there's a chance, but i think it's slim. >> wouldn't it be interesting? if they didn't -- if they didn't go tomorrow and left it in their quiver for later, would the markets -- how would the markets

respond to that? >> i've been trying to figure that out i'm proud to say i was one of those 43 that participated in the survey i am one of those -- i'm part of that 98% but not part of the ones that think there's an illusion that's going to happen next year unless it's later next year also worried about the wisdom of crowds which is almost never right. and almost everyone is expecting this fed rate increase to occur to follow that i would ask myself, what does the market want the fed to do? are we saying that if they raise rates tomorrow, they're still confident in the economy but the dovish language would say that inflation is pretty much all under control? or do they want them not to do anything because they're fearful the economy has already turned over which would be severely negative follow the script. i think they're supposed to raise rates tomorrow i think the markets will settle

down into 2019 >> markets settle down in terms of volatility? or -- >> volatility is going to be with us. but we're going to know more about the rate cycle which i would think the next time they look at it would be march. maybe after that, the end of the year or not at all so i think it will give the markets, especially the bond market some validation for what they've been saying all week long >> but what's it about the economy? >> well, it has to be -- for the bond market, it's always about inflation. for the stock market, i'm assuming it's about the economy and in some part, the fed. i don't think anyone cared -- >> data from the survey which is we asked people what is the major reason for the selloff and trade concern is in the number one position global economic weakness in the number two and fed rates gets into the third position >> that wasn't in the tweet. >> right no >> i think the president and his administration know the effects here >> so the question becomes if that's the case, if the

administration is looking at this, do they try and come to some sort of a deal more quickly rather than later twith this? what do you think? >> i think that's one of the things contributing to the volatility we don't know how that trade thing is going to work out you're saying yeah it should be saying hey be careful there. let's try to get a deal done >> how much do you think the china tightness is weighing on the fed? >> i think it's a big deal if you look at the percentage china represents of total global gdp growth, it's about 27% in terms of what numbers you use if you use purchasing power, but they're 15% of the economy and a third of the growth. when it comes off, that's why, andrew, other administrations and other ways of doing things were sensitive to the idea of their policies -- >> my question is you are a fed governor and you're in the room

and having that conversation about china, how do you calculate, handicap, what the administration and president xi are going to do? do you even try to and does that factor into the thinking >> it's one of those things you've got to say, hey, we've got to think about how that's going to evolve. >> best case, worst case and we're going to go along with the worst case or with the best case? >> you got to goalong with wai and see. >> no, no. i think powell has said what he would do in that situation it's the metaphor he's been using when you don't -- you walk into a room and the lights are down, you go slowly. by the way, yellen's fed did the same thing you wait until these things clear in front of you before you move ahead and so i think that's why they'll do this december rate hike, wait to see how the chinese situation -- >> why go with the december rate hike if that's the case? if you want to go with clarity,

that's a terrible time to raise rates. >> i don't have a good answer to that, becky. when we went to a fed meeting, i know what the fed's going to do and feel confident i don't feel confident right now. i think there's a chance -- i think there's a small chance -- i think there's a 20% -- >> you're saying -- >> look. we can have the same question around this table the fed is having there is no information we lack other than the output of the fed model. >> that's my one thing >> you can have the same conversation >> they may have decided they'd rather not hike rates. but because they haven't telegraphed that, would theybe caught in the box? >> they might they might they would argue -- you could make the case 3% growth, 3.1% growth, 3.7% unemployment. we've got more growth and lower unemployment than we forecast. you can make that case >> okay. steve liesman, thank you we will find out the answer to all of this tomorrow happily kevin giddis, thank you.

josh hyman, thanks when we come back, new criminal charges against goldman sachs over it dealings with an investment fund in malaysia. and later, the man representing plaintiffs against johnson & johnson will join us lead counsel mark linear is our special guest. l t his response to alex gorsky's comments on "mad money" last night that's coming up "squawk box" will be right back. most kids today will have jobs that don't exist yet. the engine management systems coordinate with autonomous vehicles. financial data, so now we can predict the future. our new flexible propeller design. by collaborating with public schools on a program called p-tech, ibm is helping students build the skills they'll need for tomorrow. revolutionizing. aerospace industry. it's an entirely sustainable approach. any questions? when you rethink education, everyone can put smart to work.

goldman sachs, one of the worst performing big banks yesterday hit its lowest level since 2016 one of the factors driving down the stock, new criminal charges from the malaysian government and the attorney general over there. over the 1 mdb scandal joining us now is vanity fair special correspondent, cnbc contributor william cohen. looking to see who this finally sticks to. whether it sticks to goldman and whether it's a final stick to them maybe for a bank that big. lloyd i think wanted -- he's quoted as saying i want goldman sachs brought to the world after the financial crisis tough to grow revenue and the

bank malaysia was one of the places -- >> that's part of the world. >> part of the world, but was there a push did his executives feel a push by him to cut corners to do that and did david solomon have anything to do with it >> all great questions, joe. so i don't think we really know. we know we know bits and pieces of this story so far >> they're good, though. the ones we know >> they're juicy there's a book out there about it david solomon was head of investment banking at this time. this was an investment banking transaction. the thing that sticks in my mind is the fee right? if you're doing, say, a total of $6 billion -- you're talking about the outsized fee >> a 10% fee on an underwriting now. what goldman said yesterday was the ma lashs government wanted more money immediately they wanted to take this onto the balance sheet.

we're going to take risks and take a bigger fee. okay that makes sense to me but still -- >> it makes sense and if you're dumb enough to give me the money, i'll take it. >> look. it's very unusual for a client to come after an underwriter for raising the money that they wanted them to raise now, clearly there's something going on with the bankers over there in malaysia and the intermediary where there's smoke, there's fire so the situation is not what david solomon wanted to start off his tenure >> the malaysian government going after them, that's one thing. and i'm not suggesting we'd write that off normally. the question to me, though, is what do you think the justice department is doing, what do you think the s.e.c. may do, what do you think it does to the senior management of the company going forward, are there clients that are going to say i don't want to do business because of this? do we have any even sense of what the answers are to any of

those questions? because the stock is down to third. a third on this. way below book >> it went public at four times book 20 years ago. think of the magnitude of that pricing differential look goldman is about to have its 150th anniversary next year. it has experienced crises its whole existence that almost put the whole firm out of business. >> is this one of those? >> i don't believe this is one of those unless you're going to tell me that lloyd blankfein was in the room with j. lo and that they decided at that point they were going to -- >> well, the notion that boyd was, you know, knew everything that was happening at all times, is this a one off? or were there relaxed controls around the world >> gold man has superior controls >> what happened here? they did it before it was vetted, essentially, right >> well, again, we don't know.

>> that's a lot of money >> seems like it was a oneoff. it's not the way goldman wants to do business or the way the clients expect it to do business this is obviously a bit of a black eye. but -- and i don't mean to minimize it in any way, but it's a diversion away there's a group in that firm that's laser focused on trying to resolve this. the s.e.c. is looking. the justice department is looking. they look at a lot of things goldman has got to be about trying to settle this right now and fast as soon as they can. you know, the abacus deal cost them $353 million. this is probably going to be more >> could it start with a "b" >> it could. this is not existential to goldman sachs.

they're running a big firm this is like did jamie dimon know about the whale, the london whale issue? >> some of the evidence we've seen is completely circumstantial the idea you were at a meeting with this guy. >> that happens all the time right? the ceo of goldman sachs -- >> you're like harvey eleven le. you only come when we have a horrible period. >> the tmz of cnbc >> that okay >> it's fine. >> all right william cohan thank you. when we return, volatility and your money check out this morning's premarket winners and losers in the dow. "squawk" returns in just a moment alpha seems more elusive today. is it because so many go after it the same way, chasing after short-term returns? instead if getting caught up with the crowd,

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yippiekiyay. ♪ mom. ♪ welcome back, everybody. les moonves is not entitled to his $120 million severance package. he was ousted after sexual misconduct allegations let's turn to our guest host this morning, talk about more of today's big stories. walter isaacson is here with us. what do you think of the latest step in the moonves saga we've been following for awhile? you surprised he's not going to

get that $120 million? >> no. it's inevitable. i don't see how the board could have done otherwise not just for the allegations against him but the fact that he didn't cooperate with the investigation quite well, was doing other things on the side let me say something larger about les moonves because i admired him. >> me too. >> the big media companies, you can divide them up into those run by product people, who really care about the product they're making the -- it used to be in the old days they are less michael eisner was, ted turner was but nowadays whether it's at&t, time warner, other things like that, there are people who just don't get into the weeds and say here's this show here's the show runner reporting to me on what we're supposed to do and i like the fact that les moonves was somebody who had a

real fingertip feel for every product he made which makes this all the more tragic. >> i push back on that we're out of time right now, but we've got you for another hour so we can talk more about it i would say today it may be more complicated because of what you're facing in the industry right now and you need to be more than just a gut programmer at this point to be able to go on >> but the product still matters. >> it does but i was going to point to somebody like bob backes two big hours ahead. steven moore is coming up. "squawk" returns and we are going to talking about j&j with the lead lawyer taking on that case in just a bit

icy markets. month's only half over, but we're now on pace for the worst december since the great depression cbs denying a severance package to les moonves we'll tell you what the board said about its former leader and johnson & johnson fights back as the company ceo says its baby powder has no asbestos, we'll speak to a lawyer who won a talc verdict against j&j this year. the final hour of "squawk box" begins right now ♪ live from the most powerful city in the world, new york, this is "squawk box.

>> good morning and welcome back to "squawk box" here on the nasdaq market site times square just to see -- are we still in times square huh? >> police officers >> yes always they're here to protect you. and us >> protect us from joe >> armed forces recruiting station right there. >> the blue wave love those guys. >> a lot of lights flashing. and the christmas tree has just been lit so you can't walk 5th or 6th avenue. >> you've seen every recruiting tape for every horrible -- >> moving on >> what do they always say >> just keep reading >> it's always the same place. it's right out there like the center of the universe. anyway i'm joe kernen along with becky -- thank you for being here and there's a police -- actually, the -- all right becky quick and andrew ross sorkin our guest host today walter isaacson

the futures right now, i saw 250 a minute ago 237 on the futures and the treasuries, not surprisingly the more the market sells off, the lower the yield goes 2.83% on the 10-year it's the cross roads of the world, times square. here are the stories investors will be talking about today. markets pointing in a direction they haven't in more than 80 years. with the dow down 1,000 points the last two trading sessions, markets are on pace for the most painful december since the great depression all in correction territory and they are all posting their low closes of the year yesterday cbs says that it will not pay its former chairman and ceo les moonves a severance package worth about $120 million this comes after an investigation into sexual harassment allegations against

moonves. a statement from the board of directors says that he breached his contract and did not cooperate fully with the investigation. and johnson & johnson chairman and ceo alex gorsky says the company believes its talc and baby powder does not contain asbestos he addressed the controversy last night with jim cramer on "mad money." >> there's some allegations that maybe we weren't as forthcoming as we should have been these things go back to the 1960s, '70s, '80s. even the reuters author stated over the past 15 years that there have been no issues related to asbestos in talc or baby powder being used >> that was a key point. one of many that gorsky made last night in this interview with jim cramer. johnson & johnson announced a stock buyback. shares are up by about 1% after falling 3% yesterday and 10% on friday when the news first

broke. few stocks on the move to tell you about today darden restaurants beating estimates by a penny with 92 cents per share. the olive garden parent saw same store restaurant staeales incre. and a stock increase in boeing and financial information provider factset beat estimates by 6 cents factset also maintained its prior full year outlook. everybody on wall street right now trying to put their finger behind what's behind the most recent market selloff >> from the cnbc fed survey, what we have here is we asked people, tell us of these following categories here was the contribution a lot, little, not at all tariffs got the most votes in terms of being a lot responsible for the recent market selloffs

71%. followed by global economic concerns 55%. then the fed in the middle there at 37% earnings and outlook and the last is u.s. economic weakness that's the final one that's the contributor there. then we said, okay given how much the market sold off and bond yields have declined, does the market have it right and 63% say no the market is -- this outlook reflected in the market is too pessimistic. 27% saying it's just right and part of that comes from their outlook for the trade talks. we said by march 1, what's going to happen? new tariffs? trade agreement? or continuation with no tariffs? why are you laughing, andrew >> nothing i'm not laughing at all. >> is this money managers? >> money managers, economists. half of them are economists. the rest are strategists one more thing i have to point out which i've come on here every time and talked about how this group largely supports the president on how he's handling the economy.

biggest drop we've seen in his approval rating from this group. 52% now approve strongly or somewhat of the president's handling of the economy. 31% disapprove it's the tightest margin i don't know if some of the accumulation of what's happened has served to undermine. but it is down from the high but last -- in november, 2/3 supported his handling of the economy. i'm not sure precisely what happened it could be the composition of the group. that's possible. but the other thing is we have a pretty high chance of recession in the next 12 months. it's up to 23% which the average is 19% during the trump presidency, it's been -- >> you tend to feel less happy about what's happening >> joe, i think that's really smart and i think it raises the question which i have been puzzling over which is how much the market downdraft itself has

influenced and created the doom and gloom of the economic outcome. and can we see -- can we -- >> but you can also make the same argument on the way up. >> you could you could. but it doesn't matter. >> we always talk about whether the stock market causes economic weakness >> let's turn to the fed president trump tweeting a short time ago about today's fomc meeting saying i hope the people at the fed will read today's "wall street journal" editorial before they make yet another mistake. also don't let the market become any more il-liquid than it already is stop with the four b's feel the market. be the ball. don't just go by meaningless numbers. good luck. do you know what that's from >> it's one of the movies -- basketball movie >> no "caddy shack." feel the ball. >> you know that by heart, don't

you? >> a lot of it here with his thoughts on the fed and the prospect of a government shutdown, let's welcome steven moore, former economic adviser dalai lama himself of economic advising and he's now now distinguished -- he's not just any foellow. he's one of the distinguished fellows. co-author. this is so long we got to send the interview. of "trump nonomics. anyone send you tmy interview i had him spinning in circles. >> trashed my book >> he trashed your book. >> by the way, this "wall street journal" editorial you mentioned as you know you didn't even mention i used to work on the editorial board at "the wall street journal" for ten years. that's when i first met you.

that's a bit of a switch for the journal over the last couple of years. they've been very hawkish on the fed. and today's editorial was important. they basically said, look. enough is enough the fed is, i think -- and i think "the wall street journal" said this. "the wall street journal" is actually causing -- may be causing the recession these rate hikes are supposed to help us get out of it. i think there's a shift now on the opinion of the fed the fed is way too tight and even since i said that, commodities keep falling in my opinion, that's the best indication >> steve, it's not inconsistent though to say they should have been hawkish two years ago. doesn't water get heavy? hold on for one second you're going to break. your back is like -- but anyway. it could have been that they

stayed too long at the zero party and now you can't raise. >> i don't buy that. i think the big mistake is what the fed did three months ago not just the rate increase but the signal that they're going to keep raising and raising and raising. i think that just sucked the oxygen -- >> yeah. the speech with judy woodruff. >> it was the interview with judy woodruff. then the peel back of it afterwards >> and the problem here is this. that the fed believes that growth causes inflation. the whole reason we put in a place our deregulation policies was to get wages up. the question i know steve liesman is shaking his head right now -- >> yeah, he is >> here's the thing. how are we going to get higher wages for workers which i think we all want if every time we get a higher wage increase, the fed tries to pull it back? >> i agree with you. and i agree with the fed letting it run

but steve, you are a huge advocate of these tax cuts i am also a supporter of the tax cuts how do you think these will work will raise potential growth and yet still support a zero funds rate in your world the cost of money should be zero on an overnight basis that you not -- you cannot believe you're going to unleash this huge capital spending boom and the cost of capital remains zero what happened to capitalism? >> well, look. here's the problem i actually don't even think the right mechanism, the fed has to get more dollar likt liquidity o the market >> $3.9 trillion, steve moore. >> as a consequence of our pro-growth tax cuts, deregulation policy, america is a great place to invest in people want dollars. and the fed isn't providing it now, i'm not so sure that lowering the fed fund rate to

zero is the right way to do that but i'm just saying when i see those commodities have fallen by 10% to 15% since the last fed move, steve, i'm calling that deflation. not inflation. i think they're following a boogeyman there. that's my view. >> when you talk oil at 49, that's the supply. >> but look. it's not just oil. look at all the commodities that are down >> transports. there's a lot of weird stuff happening. you think we're slowing down, steve? this almost looks like the negative of this being a keynesian sugar high from the tax cut rather than a permanent -- >> there's no sugar high >> but that's what people that hope there was a sugar high is -- >> it's a reality of the situation. >> look deep into your real feelings, andrew. >> let me make a couple points here first of all, the reason the economy is slowing down is because the fed is way too tight. >> what about china?

>> that's the other point. that's the second point. and by the way, read my piece in the hill today where i'm arguing that investors are way too pessimistic about a positive outcome here in this trade war this is a trade war that everybody knew was coming. we have to do it at some point we are in an abusive relationship with china. they get worse and worse and worse every day. we saw what happened with the espionage that happened last week i believe there's a high -- by the way, i saw the president last week. he believes, too, there's going -- he's going to get a call some time in the next two months saying call off the dogs. >> if you knew all of this was going to happen a year and a half ago, would you advocate for the tax cuts like you did? >> the tax cuts have been a

gigantic success in what they haven't they? in fact, the cbo >> i'd like to know. >> the trillions of dollars of debt we're going into because they're not going to pay for themselves >> larry kudlow is right about this if you look how they've revised their ten-year forecast just since we passed the forecast, they've revised upward over ten years. their gdp estimate by $6 trillion the federal government is going to get a trillion out of that. we've already paid for two-thirds of the cost of this. >> 2% inflation, 5% nominal and you're saying the fed at 2.25% is way too tight i want to know what happened to the hard money, conservative hawks i used to know on the editorial page of "the wall street journal." >> steve, i respect your opinion. >> it's your opinion it's not mine! >> i want to ask you a question. i've done this show twice now in the last couple weeks and none of you have been able to answer the question why is it that the commodity prices are falling if

we're worried about inflation? i don't get that we're in a deflationary environment. and the fed in my opinion, steve, would be insane to be raising rates in this kind of environment right now. >> i would say i respect the notion of larry kudlow of yourself that commodity prices are a leading policy indicator, but i do not embrace it. >> all right by the way, i'm more bullish today. you look at the pe ratio -- >> if you're bullish -- >> i'm so bullish on the stock market my god the pe ratios are good the economy is strong. construction is good investment is good production is good this is the most amazing divergence versus the real economy we've seen in 20 years i can't predict the future, but it doesn't look -- i mean, look. we just got the latest gdp forecasts. we're at a pace of about 3%. where's the slowdown >> yeah. it could be a lot of things.

could be the rise of the machines we may all be -- they may kill us we don't know if they like us or need us or anything. >> walter isaacson, steve. wondering if i could change the subject just slightly. >> sure. >> what do you think the possibilities are for a shutdown end of the week. and what effect would that have? >> zero effect it doesn't matter if the government shuts down during a holiday weekend. and by the way, it effects 30% of the government workers. it's going to have zero effect on the economy look, at the end of the day i don't think it's going to happen it's all up in donald trump's decision you never quite know what trump is going to do but it's a non-event i don't think investors should be worried about it. if there is a shutdown, it'll last 48 hours during a weekend so no, don't be nervous about this >> all right stephen, thank you >> but we do need to build the

wall all right? >> oh, my. that's a whole other segment come back. >> we need to secure the border, we do. one way or another >> you got it. >> and thanks for your service at the editorial board at "the wall street journal. for me it's like an oasis. it's a you neck perspective that you don't see anywhere else. i'm so lonely. anyway, coming up, andrew tell us johnson & johnson's ceo telling jim cramer he believes the company's baby powder does not contain asbestos mark lanier is going to take issue with this. he won a nearly $5 billion talc verdict against j&j earlier this year he's going to join us at 8:45 mestern ti you don't want to miss that. back in a moment ♪ there's no place like home ♪

argh! i'm trying... ♪ yippiekiyay.

♪ mom. ♪ welcome back to "squawk box," everybody. the futures have been higher all morning long right now you're looking at the dow futures up by 228 points the nasdaq up by 69. guinn the losses we've seen over the last two trading sessions, this is not putting much of a dent in that our guest host today is walter isaacson from pirella weinberg partners and a cnbc

contributor. what do you want to talk about that we haven't gotten to today? >> one of the things that interests me are these reports on facebook, instagram, everything else. we're talking about consumer lawsuits against johnson & johnson for potential harm there's a huge amount of harm there and i don't quite know what you do with these platform companies, technology companies. you don't want to over-regulate them you do maybe want to hold them accountable for things that they do and the things they cause but we don't yet have a legal regiment for that. and we may even have to look at antitrust things because they're all so dominant in their fields. and then when facebook takes over and all this happens, there's little recourse. i don't have any solutions yet, but i wouldn't worry if they were sort of a facebook, instagram with the reports that came out yesterday i read those whole reports wired magazine got a great piece

on it on what the russian agency was doing across not just for donald trump but across our society. that can't continue. but i don't know how we make it stop >> i mean, i think if you look at the regulation that's being faced by all of these companies, maybe a starting point is just what's already happened in the european union in ternl -- term of privacy >> privacy is not the biggest issue to me. >> i was thinking that i don't care about -- >> the problem of privacy is every kid in st. petersburg working for the russians, they got privacy. they got anonymity i think adding more privacy protections is not twill solving this problem adding more accountability both for the platforms meaning the companies that run the platforms and people who use -- >> you mean like publishers? >> if i did something on cnbc

the way some people are doing things on instagram, i'd be held accountable. cnbc would be held accountable >> let's get back to who's the customer i like my information. you're back to saying that the customers are the people that are getting -- buying the stuff that they get from me for free i like to control -- i don't like someone being able to sell it to somebody else. that way the customers are selling my info not me i would think the customers are the people who use facebook. >> if you want to opt out, that's fine. >> i mean in general >> the bigger problem is the -- >> fake news >> i think if you read those reports that came out yesterday and the day before, leave aside the partisanship and you're thinking, oh, this is people blaming trump's election on this i'm talking about what they did on everything from black lives matter to polarizing people

intentionally. it was a huge success. >> do you believe there's actually going to be real movement in washington on this issue? >> no. because i don't believe -- i mean, watch those congressional hearings the guys had no clue -- >> but it's yap yap about this topic but it doesn't matter. >> maybe do like johnson & johnson being held accountable in the courts. >> that's interesting. >> thank you coming up, johnson & johnson is in damage control mode over concerns surrounding its baby powder we're going to talk to the attorney who helped win a $4.7 billion talc powder verdict against j&j in a case this summer used to be on all the time can you say viox i don't know if lanier remembers that he's moved on. you're watching "squawk" on cnbc

welcome back to "squawk box. some news just out charter communications agreeing to $174 million settlement with the state of new york. charter and the former time

warner cable now known as spectrum had been accused of delivering internet speeds slower than promised part of that settlement will go to customers who will receive between $75 and $150 each. i wonder if i'm part of that here in new york you might get a discount on your next bill. we should say it also provides for 2.2 million subscribers $110 million worthof streaming services and premium channels at no charge. when we return, november housing starts data just minutes away adn ateying to get the latest re oth k number when "squawk box" comes right back. alerts -- wouldn't you like one from the market

when it might be time to buy or sell? with fidelity's real-time analytics, you'll get clear, actionable alerts about potential investment opportunities in real time. fidelity. open an account today. (sounds of race cars) the same iot technology on the ibm cloud that helps race teams improve performance and safety. bye. girls, don't wave at strangers. can now be built into everything we drive. when you apply expertise across an industry,

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we're just seconds away from the november housing start numbers. futures right now are up 220 or so jim you'iuorio is standing by ae cme. >> we're expecting 1,228,000 in housing starts we got 1,256,000 so a little bit better than expected the revision was a little worse than expected with 1,217,000 month over month we're up 32%. also up a hair for building permits we got 1,328,000. that's a good number as well the revision was flat there. building permits up 5.5% these are decent numbers

this is significant in my mind because tomorrow we're looking at a fed meeting where the market is pricing in they're going to tighten that's unusual usually the day before, we're closer to 100% on what the fed is going to do seeing these housing numbers is a big deal how the market reacted, the stocks came in up 17 handles they're still up 17 in the s&p it's the same. up 17 on a normal day. we sound like we're great in the stock market, but there's been a slew of days over the last couple weeks where we're feeling buoyant in the morning only to lose it by the end of the day. the stock market still feels ill to me. this does nothing to change that >> okay. jim, thank you for that. steve liesman joins us now he's crunching through the numbers. >> here's the thing. a permit is by definition an act about the future permits are up starts up 3.2% i will point out that the

economy data except for the survey data, take the survey day to over here that's the soft data then take the hard data over here, has been good to better actually >> good to great >> i wouldn't say great. but yeah you couldsay good to great. this is the number they had revised down. i take my cues from her. higher interest rates hurt and then you had a lot of storms a lot of stuff happened. and now you're seeing something of a bounceback. and when i see the 5% growth in permits, that's an act for the future so everybody is so sure the economy is going to slow down so much i want to point out two things the fed had the slowdown price built into its forecast beginning this year. i'm not sure becky, maybe you know. when did the market wake up to the idea that 2019 was going to be slower? >> i think you could point that back for quite a while >> but it seems like they just

got spooked about it, you know what i'm saying? >> yeah >> so they had the 2.5% built in tomorrow the fed is going to bring that number down more for 2019 >> the number of hikes >> the consensus gdp forecast. i think it's going to be down closer to 2.2%, somewhere in there. if you think about the market being tighter, global economic weakness if you thought what you thought before that, you've got to think it's less now. >> that's fair >> but it's not negative or zero or one if we do at or close to potential, maybe the market is overdoing it here. that's my point. you could have stability in the sensitive housing sector zbligs anybody who thought we were going to be done after all the pain that had already come back in yesterday was something to really catch your attention and say what is moving sentiment right now, what's not stopping this fall from happening

that was unnerving >> and it's useful to put up the 10-year yield which had i thought moved itself over 3% was at 3.25%, headed to 3.5% >> back at 2.8% now. >> and it's, you know, hard to say interest rates are currently a factor as the markets priced out higher rates then the market still falls 500 points yesterday. >> what data points do we have that the economy may be slowing now we don't have the -- >> only the survey data. unless i'm missing something the employment number was good the retail number was good my update where we track the current forecast for the fourth quarter, up to 3%. it was down below 3% they went from 2.8% to 3% on the retail sales number. >> got anything that's not coincident >> most of it is coincident. >> at the stock market we've got oil. >> you know the stock market's

record 13 in the last recessions. >> but it's still better than the fed's record. >> that may be >> do you think a slowdown in china is actually bad data for us >> that's the new information, i would say. that's the slowdown overseas >> consumers in europe, bad numbers from them too. >> but becky knows the power of the u.s. consumer. we've seen in the past the u.s. consumer bail the world out. i'm not sure it's going to happen this time >> that was my argument when we point to china we're supposed to be able to do it here. we'll get by >> it's price maker versus price taker. i think the u.s. is the price maker not the price taker. if we do well, i think the rest of the world does well but we would take a hit for the rest of the world. >> steve, thank you. steve liesman. when we come back, fallout from the concern over johnson & johnson's baby powder. we will be joined by mark lanier who helped nearly two dozen women and their families win a talcum powder lawsuit against

johnson & johnson earlier this year stay tuned "squawk box" will be right back. [leaf blower]

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welcome back to "squawk box" this morning take a quick look at futures after what was a complicated day yesterday. dow looks it would open up 204 points higher. nasdaq up 64 points.

s&p 500 looking to open 21 points higher. johnson & johnson ceo alex kor ski appearing on "mad money" last night taking a beating after a reuters report saying they knew for decades their baby powder contained asbestos >> was there any way you should have known something was wrong or is it because what happens is in this, both this and "the new york times," it starts with the concept there were two people in j&j who raised red flags >> jim, what's taken place is -- first of all, let's go back to our data we believe the talc is safe. studies, it's not only what we believe, but studies have demonstrated i think a company like johnson & johnson, you expect there to be dialogue and debate. frankly, that's healthy within an organization. but what's really important to focus is not just to select one

document, one piece of evidence, but to look at the body of evidence and totality. >> joining us now on the "squawk" newsline, mark lanier who represented 21 families who went against johnson & johnson in which the company was charged a debt of $4.69 billion. mark, thank you for joining us today. >> always a pleasure >> it's been a long time since we talked to you but this is front and center on what so many are watching. i take it you saw last night's interview where jim cramer was talking to alex gorsky about all this what did you think >> first of all, alex gorsky is a good gentleman who was an ex-marine to be commended for his service for the country. he's got a good heart and a good mind, i believe. but i believe he's also woefully short of some of the information that needs to be provided to him so that he's got a better understanding of whatnot only

went on in the '70s but what's gone on since. >> let's break that down into two pieces first of all, let's talk about the product right now. he went on the offensive and said they are sure there are no problems with their talcum powder not only with the talc but they're also convinced there is no asbestos in that product now. are you convinced at that point? >> i'm not convinced i don't share his conviction i think the testing by some independent lab, when the right testing techniques are used demonstrate the presence of asbestos in minute quantities but present nonetheless. and there's a debate that we have with j&j and their experts about what is defined as a bess to, what is, what isn't. does it meet the measurements, et cetera. >> you would today not let it in your household >> no.

>> mark, are you sure talc itself without asbestos, are you sure talc is perfectly harmless? let's say zeros a b s a bes sas >> even if the molecular structure in some animal studies it's unclear whether that is -- has sot carcinogenic qualities without asbestos at all. but you're hanging all your legal claims on the presence of some amount of asbestos. >> yes i believe it's the asbestos in the talc that causes the problems we see. there is fibrous talc itself that mie cause the problem but i'm not sure the jury's in on that. i know the jury is in on the asbestos angle >> mark, let's go back just to this idea of independent researchers that you are citing and what alex gorsky was saying last night he was citing not only johnson &

johnson on this but other places where these studies have been done i think probably at best you can say it's murky would you agree with that? >> well, i wouldn't. because if you look at some of the independent studies that mr. gorsky references, prfor exampl, the colorado school of minds they said the proper technique to find it is going to be a pre-concentration technique and the company chose not to do that so if the company had used the proper technique, even the company admitted it would show asbestos in their talc and that's in their documents. you get these independent sources that are using inadequate testing techniques and they don't find the asbestos if they use the right testing techniques, they do. so rutgers finds it. lots of people affiliated in some way or another with j&j find the presence of asbestos. >> regulators, he went on to

say, side with j&j on this >> well, and again i've got to tell them that mr. gorsky, if he looks at certain documents, he's going to come up with that opinion. >> why aren't the cancer rates higher if asbestos is all over this is the same thing we talk about with cell phones give me a number for how much more likely someone who uses johnson babypowder is of getting cancer even a really small number then look in the general population use that as your test case why aren't you seeing much higher incidents of the cancer that you're talking about? because it still doesn't seem like -- it'd have to be a small number and hard to prove it's related to the baby powder seems very small compared to the number of people that are diagnosed with all kinds of

cancer with isn't necessarily because of baby powder >> seems like a small number >> 200 million baby bottoms in america among our population were powdered with this. so you're going to have some measure of cancer and 20,000 cases of ovarian cancer is a large amount >> mark, you've won a number of major billion-dollar lawsuits or at least settled for billion-dollar numbers before. as you've looked at this stock, it's off $40 billion i know you're not a stock picker, but do you see liability for this company that comes even close to that kind of number >> no. to be honest with you, i don't i think this litigation, resolved and the problems can be resolved much, much less than $40 billion. it serves my purposes as a

litigant to say yes get their attention, keep driving the stock down but as an honest answer, i've got to tell you -- >> 20,000 divided by hundreds of billions figure out that number 20,000 divided by hundreds of millions and then tell me what the incidence is in the control group. i'll bet it's the same that's a specious argument you're making. it's a big number but not compared to 100 million. it's a fraction. you've got to go out how many decimal points to get to 20,000? >> joe, we don't have a control group. >> the hundred million using it versus the normal population -- okay what is the normal incidence of ovarian cancer with people who don't use baby powder? >> if you go into some third world countries where they don't use baby powder, you have a low incidence of ovarian cancer. >> 20,000 divided by hundreds of millions, i don't know

>> but joe, there are so many complications on this that what you've got to do -- nobody disputes the fact that asbestos causes ovarian cancer. but the question is there asbestos present if so, don't use it. if not, fine >> mark, i don't want to be here to relitigate the case what i'm interested in from a business perspective at this point is going forward how this company goes forward, whether it goes forward what that means. and i'm fascinated by your view that -- and i appreciate your candor that this $40 billion has been knocked off the company you don't think is appropriate in terms of additional lawsuits out there and additional liability, what does that look like to you as a lawyer and expert in this field >> well, it all depends on how the company handles it if the company handles the litigation right, it's

manageable for the size and strength of j&j. if the company continues to handle it wrongly, then i think the company is going to continue to have problems that cost it two, three, four, five times what it should and so the company needs to sit down and have some serious litigation strategy on this. and if they do, i think that by far -- >> do you think they should take the product off the shelves? >> yeah, i would take the -- absolutely they make a baby powder with corn starch that's 100% face and just as effective, if not more effective. they have no reason to sell the talc >> i'm listening and i admit i'm listening as a skeptic let me walk through what you just said. you think the company should change its strategy. here's what alex gorsky said to jim cramer last night. he's looking at the lawsuits that have been brought he said the more recent cases over the last 12, 18 or 24

months there's been 40 in total 35 of them have gone our way either through decision or appeal and the five outstanding, those are also under appeal. i assume the five outstanding includes your case so you're basically saying you'd take a settlement from them rather than wait and see how this goes on appeal? am i wrong in interpreting that's what you're saying here >> becky, every case ultimately settles. i don't know that i've ever had a case that goes all the way to the supreme court and then is paid in full every case finds resolution. at some point it's a business decision for the litigants as well as for the company. and smart minds can prevail on that so obviously there needs to be business solution. this is a business problem at its core not just litigation. all litigation ends up being a business decision. >> to talc miners have any higher incidence of cancer >> it's interesting the answer

is according to some studies yes. some studies no. so it depends on how the studies are done remember, joe, the talc miners are wearing protective gear. they've got rest praters and masks and all that i haven't seen many women wearing masks. >> this is crazy >> bit seems that you don't need to get this big war, all you need to do is prove or show that you cannot prove there is no abestos present. >> well, joe, i don't think i would agree with you there

i know i would not because i don't have any doubt we tested 80 plus containers of this stuff and having independent lab tested and they found beasbestos present >> that was done a month ago some of these containers originally we were told, yes, the containers got contaminated. give us some samples from the j&j museum and we'll test that >> this is all off the shelves today. >> we tested some bottles off the shelve today and some of them show the presence of asbestos and some of them do not. >> some of them do though, you are suggesting >> absolutely. if you go back and have a

conversation with merck and the larger issue was whether that's going to impact the brand and other product, when you think of j&j and the large consumer brand that represents, you know given your experience with other companies, how much of an effect impact do you think it has beyond the specific product in this case, the tout. >> i don't think its got as big of an effect as the world think about. there are johnson & johnson products that i use. i used one this morning. they can stand on those strengths. i don't have any problem taking tylenol or a lot of their really good products. if they got a product that's s disaffective, i got a problem

with it. that's the nature of the way it goes >> johnson & johnson, you came up with a big settlement against it and won come cases. >> mark, we want to thank you your time. obviously there will be some conversations had between you and the company. >> mark, we appreciate it. >> you keep it up. >> mark lanier, thank you. >> let's get down to jim cramer, cnbc, you talked to gorsky last night and now we are trying to figure the other side. we have a control group because of all the hundreds of millions of people that have used it overtime you need to compare the incidents of the ovarian cancer

to the population that's using it and if you don't see a big increase you are sort of chasing an ambulance >> i agree also, by the way, mark lanier, the actual mind that has no increase and population is the same who had asbestos who had issues that came from the disease that was linked to asbestos i did a lot of work on that on sunday with protective gear, we are talking about no instances you are going to a mine. i don't think anyone in the coal mine would say protective gear works. the woman that wrote the story came on-air that says no asbestos in tout both sides stipulate that there

is nothing that made me think, wait a second, a graduate west poi point -- >> jim, let me ask you one question, what jumped out of me from this conversation with lanier that he looks like he's trying to force a settlement >> they don't have the money >> he's going to continue that conversation, gorsky laid out how these lawsuits have been going their way a vast number of them >> well, maybe, $5 billion that's absolutely right. what was interesting, joe, thank you for your questioning, we found out it was a business. i thought it was about justice if it is a business and he puts on a limit of how much it will be, it is kind of like listen, i am taking j & j, i am a buyer.

it is a business >> no way to run a business. >> maybe losers pay may work >> if it is a business, maybe his pno is bad this quarter. it is a business, joe, you thought it was justice until you heard that interview i bet you think it was justice you didn't know it is business >> did you know it is pno? >> yes, deep down i did not know some of those guys >> how was his quarter when is his conference call. if it is a business, i want to see how he's doing or maybe i want to invest in it >> there is a whole business called legal finance >> yes >> honestly, maybe there is a buy back or dividend >> we'll see you in a couple of

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>> i think we have used so many products i use it all the time. >> where, walter >> asbestos. >> walter, thank you >> that does it for us today make sure you join us tomorrow, right now it is time for "squawk on the street. ♪ good tuesday morning, welcome to "squawk on the street," i am carl quintanilla, with jim cramer and david faber, another test here, futures up about 202 after stocks closed at 14-month low on pace for the worst december since 31. the president tells jay powell to feel the market europe is mixed and asia was weak and oil was